[Federal Register Volume 61, Number 101 (Thursday, May 23, 1996)]
[Notices]
[Pages 25869-25870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12926]



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FEDERAL DEPOSIT INSURANCE CORPORATION

Capital Forbearance; Rescission of Policy Statement

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Rescission of policy statement.

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SUMMARY: As part of the FDIC's systematic review of its regulations and 
written policies under section 303(a) of the Riegle Community 
Development and Regulatory Improvement Act of 1994 (CDRI), the FDIC is 
rescinding its Guidelines for Implementing a Policy of Capital 
Forbearance (Policy Statement). The Policy Statement provided 
guidelines for certain well-managed viable banks to apply to the FDIC 
for capital forbearance. The FDIC is rescinding the Policy Statement 
because it is now outmoded.

EFFECTIVE DATE: This Policy Statement is rescinded May 23, 1996.

FOR FURTHER INFORMATION CONTACT: Robert W. Walsh, Manager, (202) 898-
6911, Division of Supervision; Jamey Basham, Counsel, (202) 898-7265, 
Legal Division, FDIC, 550 17th Street, N.W., Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION: The FDIC is conducting a systematic review 
of its regulations and written policies. Section 303(a) of the CDRI (12 
U.S.C. 4803(a)) requires each federal banking agency to streamline and 
modify its regulations and written policies in order to improve 
efficiency, reduce unnecessary costs, and eliminate unwarranted 
constraints on credit availability. Section 303(a) also requires each 
federal banking agency to remove inconsistencies and outmoded and 
duplicative requirements from its regulations and written policies.
    As part of this review, the FDIC has determined that the Policy 
Statement is outmoded, and that the FDIC's written policies can be 
streamlined by its elimination.
    The FDIC adopted the Policy Statement on July 7, 1987. 52 FR 26182 
(July 13, 1987). The Policy Statement provided guidelines under which 
certain banks, which were well-managed, solvent and viable but were 
having difficulty raising needed capital because they served an 
inadequately diversified economic sector caught in a severe downturn, 
could apply to the FDIC for capital forbearance. Since all capital 
improvement plans established under the Policy Statement were required 
by the Policy Statement's terms to assure capital restoration by 
January 1, 1995, the Policy Statement serves no further purpose.
    Moreover, as part of the Federal Deposit Insurance Corporation

[[Page 25870]]

Improvement Act of 1991, Pub. L. 102-242, 105 Stat. 2236, 2253, 
Congress adopted the prompt corrective action provisions codified in 
section 38 of the Federal Deposit Insurance Act, 12 U.S.C. 1831o, 
establishing a statutory structure for addressing insured depository 
institutions with declining capital. This statutory structure does not 
allow capital forbearance as contemplated in the Policy Statement.
    For the above reasons, the Policy Statement is hereby rescinded.

    By Order of the Board of Directors.

    Dated at Washington, D.C., this 14th day of May, 1996.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-12926 Filed 5-22-96; 8:45 am]
BILLING CODE 6714-01-P